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Pro-Dex, Inc. Announces Fiscal 2021 First Quarter Results

November 5, 2020 GMT

IRVINE, CA / ACCESSWIRE / November 5, 2020 / PRO-DEX, INC. (NasdaqCM:PDEX) today announced financial results for its fiscal 2021 first quarter ended September 30, 2020. The Company also filed its Quarterly Report on Form 10-Q for the first quarter of fiscal year 2021 with the Securities and Exchange Commission today.

Net sales for the three months ended September 30, 2020, increased $1.4 million, or 19%, to $8.6 million from $7.2 million for the three months ended September 30, 2019. The increase is driven by sales of our newest thoracic driver.

Gross profit for the three months ended September 30, 2020, increased $695,000, or 25%, to $3.5 million, compared to $2.8 million for the year-ago period. Gross margin increased by 2 percentage points to 40% during the three months ended September 30, 2020, compared to 38% during the corresponding year-ago period due to favorable product mix and increased absorption of our fixed manufacturing overhead expenses.

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Operating expenses (which include selling, general and administrative, and research and development expenses) for the quarter ended September 30, 2020, increased $637,000 from the corresponding year-ago period. We are increasing these expenditures in an effort to release new products and garner new customer relationships.

Net income for the quarter ended September 30, 2020, was $1.3 million, or $0.32 per diluted share, compared to $1.1 million, or $0.27 per diluted share, for the quarter ended September 30, 2019.

CEO Comments

Richard L. (“Rick”) Van Kirk, the Company’s President and Chief Executive Officer, commented, “We are pleased with our first quarter results. We continue to reinvest our profits in research and development to continue to grow our core medical device business and expect to close on the purchase of a new building to expand our operations as early as tomorrow. Finally,” concluded Mr. Van Kirk, “we expect to introduce another CMF driver and our ENT shaver by the end of the current fiscal year.”

The amount spent on projects under development, along with the current estimated commercial launch date and estimated recurring annual revenue, is summarized below (in thousands):

For the Three Months Ended September, 30
2020 2019 Market Launch(1) Est Annual Revenue

Total Research & Development costs:

$ 1,091 $ 484

Products in development:

Thoracic Driver(2)

$ - $ 19 (2 ) $ 4,000

Arthroscopic Shaver(3)

- 6 (3 ) $ 600

ENT Shaver

183 89 Q2 2021 $ 1,000

VITAL Ventilator

57 - Q3 2021 $ 1,500

CMF Driver

189 17 Q1 2021 $ 1,000

Sustaining & Other

662 353

Total

$ 1,091 $ 484

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In the fourth quarter of fiscal 2020, we were one of eight US-based companies awarded a license to manufacture the Jet Propulsion Laboratory’s Ventilator Intervention Technology Accessible Locally (“VITAL”), a high-pressure, lower cost ventilator. In order to manufacture this product, we will require a full clean room, which we plan to install in our Tustin facility (assuming we close on the property, which is expected to occur on or around November 6, 2020). We are also nearing completion on the verification and validation of a new CMF driver, which we will be selling to our existing largest customer under a distribution agreement, that we executed in the first quarter of fiscal 2021. Finally, we also anticipate the release to manufacture of a new ENT Shaver in the spring of 2021 and our Director of Business Development is working with a promising medical device distributor to commercialize this product.

About Pro-Dex, Inc.:

Pro-Dex, Inc. specializes in the design, development, and manufacture of autoclavable, battery-powered and electric, multi-function surgical drivers and shavers used primarily in the orthopedic, thoracic, and maxocranial facial markets. We have patented adoptive torque-limiting software and proprietary sealing solutions that appeal to our customers, primarily medical device distributors. Pro-Dex also sells compact pneumatic air motors for a variety of industrial applications. Pro-Dex’s products are found in hospitals and medical engineering labs around the world. For more information, visit the Company’s website at www.pro-dex.com.

Statements herein concerning the Company’s plans, growth, and strategies may include ‘forward-looking statements’ within the context of the federal securities laws. Statements regarding the Company’s future events, developments, and future performance, as well as management’s expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The Company’s actual results may differ materially from those suggested as a result of various factors. Interested parties should refer to the risk factors and other disclosures concerning the operational and business concerns of the Company set forth in the Company’s filings with the Securities and Exchange Commission.

(tables follow)

PRO-DEX, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

(In thousands, except share amounts)

September 30, 2020

June 30,

2020

ASSETS

Current Assets:

Cash and cash equivalents..........................................

$ 5,202 $ 6,421

Investments................................................................

2,400 2,560

Accounts receivable, net of allowance for doubtful accounts of $9 and $6 at September 30, 2020 and at June 30, 2020, respectively.................................

6,138 5,155

Deferred costs...........................................................

142 155

Inventory....................................................................

8,313 8,238

Prepaid expenses and other current assets.................

343 145

Total current assets.................................................

22,538 22,674

Equipment and leasehold improvements, net................

2,629 2,686

Right of use asset, net....................................................

2,861 2,943

Intangibles, net...............................................................

159 162

Deferred income taxes, net............................................

259 259

Investments....................................................................

2,309 2,360

Other assets....................................................................

42 42

Total assets.................................................................

$ 30,797 $ 31,126

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable.......................................................

$ 1,834 $ 1,965

Accrued expenses.......................................................

1,757 2,411

Deferred revenue........................................................

200 200

Note payable and capital lease obligations................

660 651

Total current liabilities...........................................

4,451 5,227

Lease liability, net of current portion...........................

2,695 2,750

Income taxes payable...................................................

486 804

Notes and capital leases payable, net of current portion

3,114 3,283

Total non-current liabilities....................................

6,295 6,837

Total liabilities...........................................................

10,746 12,064

Shareholders' Equity:

Common shares; no par value; 50,000,000 shares authorized; 3,858,251 and 3,811,137 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively.............................................

12,583 12,752

Accumulated other comprehensive loss.....................

(1,693 ) (1,586 )

Retained earnings.......................................................

9,161 7,896

Total shareholders' equity......................................

20,051 19,062

Total liabilities and shareholders' equity............

$ 30,797 $ 31,126

PRO-DEX, INC.

CONDENSED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME

(Unaudited)

(In thousands, except share and per share amounts)

Three Months Ended September 30,
2020 2019

Net sales

$ 8,590 $ 7,240

Cost of sales

5,115 4,460

Gross profit

3,475 2,780

Operating expenses:

Selling expenses

130 142

General and administrative expenses

705 663

Research and development costs

1,091 484

Total operating expenses

1,926 1,289

Operating income

1,549 1,491

Other income (expense):

Interest and miscellaneous income

53 35

Interest expense

(54 ) (59 )

Total other income (expense)

(1 ) (24 )

Income before income taxes

1,548 1,467

Provision for income taxes

283 363

Net income

1,265 1,104

Other comprehensive income (loss), net of tax:

Unrealized loss from marketable equity investments, net of taxes

(107 ) (57 )

Comprehensive income

$ 1,158 $ 1,047

Basic and diluted income per share:

Basic net income per share

$ 0.33 $ 0.28

Diluted net income per share

$ 0.32 $ 0.27

Weighted average common shares outstanding:

Basic

3,850,838 4,008,017

Diluted

3,975,063 4,110,414

Common shares outstanding

3,858,251 3,990,995

Contact:

Richard L. Van Kirk

Chief Executive Officer

(949) 769-3200

SOURCE: Pro-Dex, Inc.

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